China Telecom controls the country's largest fixed-line network and is a relative newcomer to the mobile market, in comparison to giants China Unicom and China mobile.

The old fixed-line network is being torn up and replaced with a system using only internet-protocol (IP) technology, which is cheaper and better at handling voice, data and images.

China Mobile, it is said, would be given the small fixed-line network run by the state-controlled railway firm and would be saddled with a 3g licence forcing it to use the domestic 3g standard.